Gupta ordered to pay $13.9 million in insider-trading case

Bloomberg News

Published 7:40 pm, Thursday, July 18, 2013

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Rajat Gupta of Westport, a former Goldman Sachs board member convicted of insider trading, will pay $13.9 million to settle related civil charges of feeding inside information to a billionaire hedge fund boss and also was permanently barred from serving as an officer or director of any public company. less

Rajat Gupta of Westport, a former Goldman Sachs board member convicted of insider trading, will pay $13.9 million to settle related civil charges of feeding inside information to a billionaire hedge fund boss ... more

Photo: Associated Press

Gupta ordered to pay $13.9 million in insider-trading case

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Rajat Gupta, the former Goldman Sachs Group director who was found guilty of passing confidential tips to jailed billionaire hedge-fund manager Raj Rajaratnam, was ordered to pay $13.9 million in a related U.S. regulatory lawsuit.

Gupta, 64, was also permanently barred from acting as an officer or director of a public company and from associating with any broker or investment adviser, the Securities and Exchange Commission said late Wednesday, citing an order by U.S. District Judge Jed Rakoff in Manhattan.

A Westport resident, Gupta was found guilty last June, of divulging confidential information to the Galleon Group co-founder about Berkshire Hathaway's $5 billion investment in Goldman Sachs, as well as nonpublic details about the bank's financial results. In October, Gupta was sentenced to two years in prison and ordered to pay a $5 million fine. He is free pending his appeal of the decision.

"The sanctions imposed send a clear message to board members who are entrusted with protecting the confidences of the companies they serve," George Canellos, co-director of SEC enforcement, said in a statement. "If you abuse your position by sharing confidential company information with friends and business associates in exchange for private gain, you will be prosecuted to the fullest extent by the SEC."

Gary Naftalis, Gupta's attorney at Kramer Levin Naftalis & Frankel, confirmed that Rakoff sent an order to lawyers in the case Wednesday night imposing the penalty of $13.9 million on Gupta. He declined to comment on Rakoff's order. Gupta has appealed his conviction and the fines and penalties could be vacated if he wins on appeal.

The case against Gupta, who was previously a managing partner at McKinsey & Co. and a board member of Procter & Gamble and American Airlines, became a centerpiece of a broader insider-trading crackdown by the SEC and federal prosecutors in New York. While the investigations mainly targeted hedge funds trading on confidential information, Gupta was the highest-profile corporate figure ensnared.

Rajaratnam in June lost an appeal of his 2011 conviction for conspiracy and securities fraud. He was ordered to pay a record $92.8 million penalty in the SEC matter, and to forfeit more than $53.8 million and pay a $10 million fine in the criminal case. Rajaratnam, 56, is serving an 11-year prison sentence.